Time Rate Wage System And It Effects

Time Rate Wage System And It Effects

Wages of workers are based on the time of production. When wages are decided on a time rate basis, the quantity of goods produced by a worker is not considered but he is paid wages on the basis of time spent by him in the factory. The time rate of wages can be determined per hour, per week or per month. This system of wages is prevalent in most of the industries. The system is suitable in the following circumstances:

  1. Where the production of proper standard and good quality is necessary for efficiency.
  2. Where the work or production by the workers cannot be measured or weighed accurately.
  3. Where the speed of the production is regulated by the time in the process, or where the operator has no control over the speed of machines. Such a situation is provided in the industries where the flow of work is regulated by the speed of conveyor belts.
  4. Where new workers are recruited because more production is not expected from them in the beginning.
  5. Where the production unit is very small and there is strict control of the foreman.

However, there are certain consequences regarding time rate wage system, which are mentioned below:-


  1. The method is very simple, and the wages of an individual worker can be calculated easily, taking less time and labour, by the following formulae:

Wages= Hours worked × Rate per Hour

Or W = HW × RH

  1. As the worker is not in a hurry to finish the work, he gives more attention to the quality of the goods produced and improves it.
  2. Under this system the worker is sure to get the fixed remunerations, so he feels security in the job.


  1. Under this system, the workers do not have any incentive for increasing production. Therefore inefficient workers do not try to improve themselves, and the workers tend to go slow in their work and do not like to let the producer benefited by their skill.
  2. As the wages of the worker are not related to productive work, he does not care much about the use of time. So, there is much idle time found in this system. To control this idle time much supervision expenses are incurred which increase the per unit production cost.

Dr Shweta Mishra
Assistant Professor, Biyani Girls College, Jaipur (RJ)